March 19, 2018
In Connecticut, propane sold for use to fuel a home electric generator is subject to the state’s gross receipts tax. But what about mixed-use tanks that supply both an electric generator and other appliances, such as a furnace for home heating?
The state’s Department of Revenue Services has issued a ruling that in such mixed-use cases, the entire sale of propane is subject to the gross receipts tax (currently 8.81 percent on the first applicable sale of the product in the state). According to DRS, the exemption from the GRT as embodied in statute 12-587(b)(2)(D) only applies to cases where the propane in a tank is “to be used exclusively for heating purposes.” A mixed-use tank, in the case of a propane tank that is also connected to an electric generator, does not qualify for the heating exemption.
Note that the heating exemption does broadly cover various types of heating, not just space heating, but also water heating, fireplaces, pools, and cooking. But as noted electric generators are not covered by this exemption, nor are cases where a tank serves both a generator and heating appliances.